Tap Into These Key Customer Triggers to Optimize Your Retail Loyalty Program

As a business owner or marketing manager, what percentage of your time and resources is spent on trying to get new customers versus re-engaging existing customers? If you’re like a lot of businesses, you’re spending much of your time trying to acquire new business. After all, more customers equals more money, right?

How to Optimize for Customer Loyalty

There are four key areas to focus on when it comes to encouraging customer loyalty:

Ease and convenience: Make it easier to buy from you than from a competitor

Customer service: Make it more pleasant to buy from you

Offers, discounts, promotions: Make it cheaper to buy from you

Personalization: Make it more personal to buy from you

These four areas come into play in a passive way when customers visit your physical store or website and find features like one-click checkout, easy returns and refunds, promo codes and free shipping, and friendly salespeople with personalized recommendations.

This is where the concept of “loyalty triggers” comes in. These are features, benefits, activities, or communications from your brand to existing customers which encourage engagement and return purchases when they otherwise might not be looking to purchase.

These values vary in importance across different retail verticals and depending on whether you have a physical store and/or a website. For example:

In the apparel niche, the ability to touch/buy the product (via a physical location) or a generous return policy (online) was significantly more important than for other verticals.

Beauty and apparel have the highest overall retailer loyalty scores among consumers (50% of consumers consider themselves loyal to a particular retailer), and jewelry has the lowest (only 32% would say they are loyal to one brand). Home, DIY, and electronics scored in the middle (35-49%).

Being able to experience and buy on the spot is most important across the board for any physical location, followed by customer service; whereas, for online shopping, being able to buy any time of day or night is most highly scored, followed by a flexible return policy.

What these features have in common are that they all reflect one or more of those four key areas: convenience, customer service, offers, and personalization. And perhaps more tellingly, regardless of whether you are an online store or a brick-and-mortar retailer, the common element is “accurate, individualized promotions and offers.”

Given that this is such a powerful trigger in incentivizing a shopper to buy, businesses need to find ways to take advantage of personalization and offers to drive new purchases from existing customers. This is where the concept of a loyalty program comes in.

Boosting Return Customers: Optimize Your Loyalty Program

One of the most common ways in which brands utilize loyalty triggers is via a loyalty program.

According to research by Accenture, 90+% of companies currently have some kind of loyalty program, and members of loyalty programs generate on average 12%-18% greater annual revenue growth than non-members.

By optimizing your loyalty program to reflect key loyalty triggers, you can improve returning customers’ engagement with your brand and increase the likelihood that they’ll continue to choose your business over your competitors’. Comarch’s research discovered that 74% of customers are more likely to return to a brand with a loyalty program (similar to Nielsen’s finding that, all things being equal, 72% of consumers worldwide will buy from a brand with a loyalty program over one without).

However, according to a study by CapGemini, a high percentage of loyalty programs are failing, with 53% of consumers stating that they abandoned at least one loyalty program within the last year. The key reasons for this are lack of reward relevance, flexibility and value (44%); a lack of a seamless multi-channel experience (33%); and/or customer service issues (17%).

In other words, these programs fail to address the four key triggers: relevant offers and personalization (lack of relevance and value), lack of a seamless experience (ease, convenience), and customer service.

For brands that want to get this right, the most important thing you can do is to understand what the customers themselves are saying about what they value in a loyalty program.

What Rewards Do Customers Value Most?

According to the Comarch report, when asked: “In order to make the loyalty program attractive for you: How important are ….”

86% said offers and promotions were “very important or important”

81% selected quality and quantity of the rewards shop

81% mentioned possibility to collect points

The rest were as follows:

61%: advantages such as previews and pre-selling of products

50%: to be part of the brand’s product development

47%: to be part of competitions and lotteries

43%: engagement: digital achievements and games

This illustrates the preference consumers have for loyalty program incentives that feature high-quality discounts and offers as a function of the program. That being said, Millennials scored competitions and games as important more frequently than older people, showing the importance of asking your specific audience what they prefer.

And across the board, the importance of relevance and flexibility in the offers and promotions is a key trend, again highlighting the importance of personalization to cement consumer loyalty.

How Do Customers Want to Receive Communications?

Comarch asked consumers how they preferred to receive brand communications in the following areas: general communications, receiving coupons, and identifying themselves as a member of the program.

Overall, customers preferred online communication, with 58% preferring to receive coupons via email/web and either use them digitally or print them out, compared with only 30% who preferred physical mailings. They also overwhelmingly favored the use of a physical loyalty card (88%) over other forms of identification (phone number/address or phone app).

How Customers Feel About Privacy

The higher the age of the customer, the more highly they value data privacy when considering whether to sign up for a loyalty program and how to interact with a brand.

Privacy is a key factor for all age groups, however, and the key factors that all customers care about include:

Transparency: How does the company use my personal data? (94%)

Understandable terms and conditions (94%)

To be able to see what kind of personal data the company collects (91%)

To be able to easily unsubscribe (91%)

To be rewarded when I allow the company to use my personal data for marketing reasons (83%)

And according to an IBM study, brand loyalty is actually a factor in how much data a customer is willing to share:

“For an average company, 38% of consumers are willing to share geographic data while 37% said they would do so with their personally identifiable information. When it came to trusted brands, these numbers spiked dramatically.”

More than two-thirds (72%) of those surveyed would share geographic data with a brand they trust, and 61% would share personally identifiable information.

In other words, trust is a huge factor both in terms of encouraging users to become a part of a loyalty program, and also when it comes to how much data they are willing to share.

Don’t Underestimate the Value of Emotional Connection

With all of this data, it can be tempting to approach your loyalty program from a place of “cold, hard facts.” But it’s also important to include strong brand values and a customer-centric approach in everything you do. According to a report published by Forrester, emotion — and an emotional connection to a brand — is a stronger driver of loyalty than factors like ‘ease’ and ‘effectiveness.’

This isn’t so surprising when you consider what people really want on the most basic level: They want others (brands included) to care about them as individuals. A 2017 study by CustomerThermometer found that the top five reasons customers gave for feeling a connection with a brand were all related to “caring.” Consumers feel a connection with a brand when they feel that the brand:

Final Tips to Optimize Your Loyalty Program

Consider using an app (or otherwise ensuring a seamless online-offline-mobile experience). More than half (60%) of consumers say they’re more likely to join a loyalty program that’s tech-savvy. Nielsen’s study shows that 67% of global program members say integration with a mobile payment system is important, so they can automatically earn and use rewards when they use a mobile wallet, and 69% are more likely to participate in a program with an app available.

Offer flexibility. Around 80% of loyalty-program participants worldwide say that they value being able to earn rewards regardless of whether a purchase was made in store, on a website, or on a mobile device (81%) and to choose among several types of rewards (79%)

For example, an offer to ‘get 10 stamps for a free coffee’ followed with, ‘when you sign up today, we’ll automatically give you 2 stamps’ is a more effective approach than simply ‘get 8 stamps for a free coffee’.

Have you tried running a loyalty program in order to incentivize returning customers? What did you learn? I’d love to hear more in the comments.

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About the Author

Bridget Randolph is a coach and consultant, helping business owners gain clarity in their marketing strategies and create thriving businesses. She's based in NYC and works with clients across the U.S., providing SEO consulting, copywriting, and integrated marketing services. She is currently developing an online training course, 'SEO for Busy Entrepreneurs', which aims to demystify the basics of SEO for the average business owner.